Bagmane to start 2 million sq ft office phase in March quarter

Bagmane REIT expects to start construction of one building in its next 2 million-square-foot office development during the March quarter. The programme comprises three buildings in the Cosmos and Bagmane Tech Park micro market, with subsequent launches planned at intervals of six to nine months and each building expected to take 24 to 27 months to complete.

What will Bagmane build after its current development?

Bagmane plans to develop 2 million square feet across three buildings after its current 1 million-square-foot development reaches near completion. Management said the new buildings will be spread across Cosmos and Bagmane Tech Park, or BTP, while describing both campuses as effectively the same location because they are in the same micro market.

The next phase is twice the size of the 1 million-square-foot development described as almost complete, but Bagmane did not disclose the square footage allocated to each of the three buildings. Management also did not provide development expenditure, individual building sizes, expected rents, or a full-programme completion date during the call.

When will Bagmane start and complete the new buildings?

Bagmane expects to begin construction on one of the three buildings in the March quarter, followed by a new building launch every six to nine months. Management gave a typical construction duration of 24 to 27 months from the start of each building, rather than the 2.5-to-three-year range put to it by an analyst.

The staggered schedule means the three buildings will not enter construction simultaneously. If the first start occurs in the March quarter as planned, the second and third starts would each depend on the disclosed six-to-nine-month cadence; Bagmane did not specify whether the interval would be measured from construction starts, launches, or another project milestone.

The 24-to-27-month estimate applies separately to each building after its own construction begins. Therefore, it should not be read as a target for completing the entire 2 million-square-foot programme, because the final building will start later than the first and management did not disclose a date for the last completion.

What leasing data has Bagmane reported at Cosmos?

Bagmane said two Cosmos leases totalling almost 600,000 square feet were signed at rents of Rs 158 to Rs 172 per square foot. Management said the valuer had estimated Cosmos market rent at about Rs 157 per square foot for the financial year, placing the disclosed lease rates Rs 1 to Rs 15 per square foot above that estimate.

Across its portfolio, Bagmane reported 1.2 million square feet of leasing in the quarter, four times the preceding quarter's level. Management said almost all of that leasing was to global capability centres, or GCCs, about half was pre-leasing, and it was achieved at rents above market.

Bagmane also said 60% of its under-construction space was committed before completion. The call did not identify how much of that committed area related specifically to Cosmos, the current 1 million-square-foot development, or the future 2 million-square-foot phase, so the figure cannot be assigned to an individual building.

How does Bagmane describe the market for the phased buildout?

Bagmane management said demand had remained unchanged over the previous six or seven quarters and expressed the view that demand would exceed supply until 2028. This was management's market assessment, not a disclosed leasing forecast or a completion forecast for the three planned buildings.

Management cited tenant requirements linked to artificial intelligence, or AI, and semiconductor activity as part of its market observations. It said average workplace occupation in India was 80 to 90 square feet per employee, while some tenants in AI-related functions were providing 250 square feet per person to help attract talent.

The development schedule sits alongside Bagmane's stated ability to consider other growth routes. Management said it had more than Rs 18,000 crore of headroom and was evaluating third-party Grade A+ office acquisitions, but said such opportunities were opportunistic, could be outbid, and had no committed transaction timetable.

What operating milestones accompany Bagmane's next phase?

Bagmane said it was in the final stages of commissioning its fourth solar farm in Chitradurga, which is expected to add 72.5 megawatt direct current, or MW DC, of renewable-energy supply. On completion, the four solar parks would supply 164.4 MW DC and meet more than 80% of portfolio and tenant energy needs from renewable sources, according to management.

The company also reported net operating income, or NOI, margins of 89% to 90% in back-to-back quarters and said it expected an 88% to 90% range going forward. Management said taxes, which were higher after advance tax was paid under the older regime, were expected to fall to 16% to 17% of NOI in FY27 after the move to the new tax regime.

Conclusion

Bagmane has set out a defined sequencing plan for the development following its current 1 million-square-foot project: 2 million square feet across three buildings, beginning with one March-quarter construction start and then moving at six-to-nine-month intervals. The plan comes after 1.2 million square feet of quarterly leasing, including almost 600,000 square feet of Cosmos leases at Rs 158 to Rs 172 per square foot.

The next milestone is the first March-quarter construction start, followed by confirmation of the timing of the second and third launches. Investors can also watch whether under-construction commitments, reported at 60%, progress during the 24-to-27-month building cycles, and whether the fourth solar farm enters service with its planned 72.5 MW DC addition.